Tracking down Mr Dinesh Dalmia

Aug 15, 2005

In the first week of July, the New York Post carried a headline that said ‘‘Dalmia deal dead’’.

The report by Christopher Byron said, ‘‘After a series of stories that showed an attempt by a Dalmia-linked outfit to merge with New York-based The A Consulting Team, Inc, the deal fell apart late Thursday. While dozing US authorities have let Dalmia take up residence in a Fort Lee, N.J., mansion in defiance of an Interpol arrest warrant, The Post has uncovered two separate attempts, seemingly directed by Dalmia, to establish secret control over a publicly traded US company and use it to gain access to the personal and financial records of millions of American citizens.’’

In 2003, the paper had exposed Dinesh Dalmia’s attempt to take over Aegis Communications Inc and the recent reports were about his attempt to get listed on the Nasdaq, through a merger with Vanguard Info-Solutions Inc, which seems to exist in many avatars — some in Gurgaon India and others in New Jersey, US.

Over the last year, I have received many emails from good samaritans in India and abroad which show that Dalmia’s connection with Allserve, a Gurgaon-based operation of Vanguard Info-Solutions, was known to many in the IT world, except our regulators.

While several regulatory agencies have been chasing Dalmia, they feign complete ignorance about his activities in the BPO business. Similarly, the Kolkata police have a red corner Interpol alert issued against Dinesh Dalmia, but despite sending emails to the highest offices in this country, all of them continue to act ignorant about reports in the New York Post and CNBC International, which have published pictures of Dalmia’s residence at New Jersey.

If American authorities are dozing, as alleged by the New York Post, they at least have less reason for agitation. After all, the American public has not lost money because of his antics — if only because of some alert journalism. The Indian regulators however are on red-alert about Dalmia, while making no attempt to have him brought back to India.

In July 2005, the Finance Ministry quietly submitted the fourth Action Taken Report (ATR) on the Ketan Parekh-led scam. Although Parekh was named as the central figure of the scam, Dinesh Dalmia and his DSQ Group dominate the July ATR. In fact, the report opens with an account of actions against Dalmia and the dozens of investment entities he has floated and penalties imposed. Part of it is because many of Dalmia’s falsifications and shenanigans came to light only after the JPC had completed its investigations. Yet, even these cover only half his activities, which are specifically referred to in the JPC report.

The actions against Dalmia and the DSQ group so far include the hefty Rs 630 crore penalty levied by Sebi along with a ban on Dalmia and certain persons connected with DSQ Software and DSQ Holdings from accessing the capital markets for 10 years. In addition, Sebi has imposed a series of lesser penalties on a dozen investment companies associated with Dalmia. The Enforcement Directorate (ED) too has imposed a penalty of Rs 64 crore on DSQ Software and another Rs 65 crore on its officials. ED has similarly imposed stiff penalties on Dalmia and his associates in an associate listed company called DSQ Biotech, which is similarly in the doldrums after several name changes.

A couple of weeks ago, the CLB also issued a stiff order against Dalmia and DSQ Software, ordering all efforts to recover the money owed to employees, shareholders and other stakeholders. It also ordered the appointment of five government directors to the company.

In connection with the investigation into the Calcutta Stock Exchange brokers, the ATR repeatedly details a report by the Kolkata police about 10 lakh fake shares of DSQ Software given to the Biyani group. The report quotes the Kolkata police as saying that its investigations are in the concluding state. However, ‘‘The prolonged absconsion (sic) of accused Dinesh Dalmia and his associates caused serious hindrance in completing the investigation’’ and collating material evidence.

The police say, ‘‘The CBI has been requested to expedite the arrest and extradition of said accused Dinesh Dalmia who has been reportedly staying in the USA’’. In fact, the New York Post reported last month that he was living in a ‘‘neo-Tudor mansion situated on a cliff overlooking the Hudson River (purchased) for $2.52 million in November of 2003’’. This is well after the scam of 2002; the crash in DSQ groups shares and after the CBI, the ED, Sebi, the CLB and the Kolkata police had started investigating Dalmia’s activities.

Is it possible that these agencies have not noticed that Dalmia and his trusted lieutenants are running a thriving call centre business out of Gurgaon? Or are connected to another outfit called NetVision operating out of Chennai?

That’s not all. Dalmia is not only living in America, but the New York Post has published several reports linking his activities to a post box mail drop in Tortola, British Virgin Islands. These reports should have surely attracted the CBI and the ED’s attention; but these agencies act only when the government of the day orders them to. The reports explain how Dalmia can afford to hire highly-paid lawyers in the US who reportedly told the New York Post that the arrest warrant against Dalmia had been thrown out by and Indian court. Meanwhile, Dalmia has been making frantic calls to his creditors in India offering to ‘settle’ all their claims.

A perplexed US source who has followed the Dalmia trail says, ‘‘Why isn’t your government asking for his extradition? With the new closeness in relations between India and the US, a letter would ensure that our enforcement agencies would put him on the next plane to India.’’ But then, he doesn’t know that Indian regulators are accountable to nobody, especially not a bunch of employees, shareholders and creditors of a group of private companies.